Which of the Below Statements Is TRUE

question 43

Multiple Choice

Which of the below statements is TRUE?

• A) In the case of a futures contract, the buyer of the contract realizes a dollar-for-dollar loss when the price of the futures contract increases.
• B) The maximum profit that the writer (seller) of an option may realize is the option price; this is offset against substantial downside risk.
• C) In the case of a futures contract, the buyer of the contract suffers a dollar-for-dollar loss when the price of the futures contract rises.
• D) The risk/reward characteristics of a futures contract and an option contract are identical.

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Definitions:

Transference

In psychoanalysis, the process by which emotions and desires originally associated with one person are unconsciously shifted to another person.

Mate Selection

The process by which individuals choose their partners based on various factors including, but not limited to, physical attractiveness, personality traits, and socio-economic status.

Mere Exposure Effect

A psychological phenomenon where people tend to develop a preference for things merely because they are familiar with them.

Initially Disliked

Refers to a negative first impression or initial negative feelings towards a person, object, or idea.